Current through Register Vol. 43, No. 12, March 20, 2024
(a) This regulation
shall not apply to life insurance policies or riders containing accelerated
long-term care benefits.
(b) Each
long-term care policy or certificate issued in this state shall offer a
nonforfeiture benefit subject to the following requirements:
(1) A policy or certificate offered with
nonforfeiture benefits shall have coverage elements, eligibility, benefit
triggers, and benefit lengths that are the same as coverage to be issued
without nonforfeiture benefits. The nonforfeiture benefit included in the offer
shall be the benefits described in subsection (f) of this regulation; and
(2) the offer shall be in writing
if the nonforfeiture benefit is not otherwise described in the outline of
coverage or other materials given to the prospective policyholder.
(c) Each long-term care policy or
certificate issued in this state after the effective date of this regulation
shall provide contingent benefit upon lapse.
(d) The contingent benefit upon lapse shall
be triggered every time an insurer increases the premium rates to a level that
results in a cumulative increase of the annual premium equal to or exceeding
the percentage of the insured's initial annual premium set forth below based on
the insured's issue age, and the policy or certificates lapses within 120 days
of the due date of the premium so increased. Unless otherwise required,
policyholders and certificate holders shall be notified at least 30 days before
the due date of the premium reflecting the rate increase.
Triggers for a Substantial
Premium Increase
Issue Age Percent Increase Over Initial Premium
29 and under 200%
30-34 190%
35-39 170%
40-44 150%
45-49 130%
50-54 110%
55-59 90%
60 70%
61 66%
62 62%
63 58%
64 54%
65 50%
66 48%
67 46%
68 44%
69 42%
70 40%
71 38%
72 36%
73 34%
74 32%
75 30%
76 28%
77 26%
78 24%
79 22%
80 20%
81 19%
82 18%
83 17%
84 16%
85 15%
86 14%
87 13%
88 12%
89 11%
90 and over 10%
(e) On or before the effective date of a
substantial premium increase as defined in subsection (d) of this regulation,
the insurer shall perform the following:
(1)
Offer to reduce policy benefits provided by the current coverage without the
requirement of additional underwriting so that required premium payments are
not increased;
(2) offer to
convert the coverage to a paid-up status with a shortened benefits period in
accordance with the terms of subsection (d) of this regulation. This option may
be elected at any time during the 120-day period specified in subsection (d) of
this regulation; and
(3) notify
the policyholder or certificate holder that a default or lapse at any time
during the 120-day period specified in subsection (d) of this regulation shall
be deemed to be the election of the offer to convert in subsection (d) of this
regulation.
(f)
Benefits continued as contingent benefit upon lapse shall be as follows:
(1) For purposes of this subsection, attained
age rating shall be defined as the schedule of premiums starting from the issue
date that increases age at least one percent per year before or at age 50, and
at least three percent per year after age 50.
(2) For purposes of this subsection, the
contingent-benefit-upon-lapse benefit shall consist of a shortened benefit
period providing paid-up long-term care insurance coverage after lapse. The
same benefits, with amounts and frequency in effect at the time of the lapse
but not increased thereafter, shall be payable for a qualifying claim, but the
lifetime maximum dollars or days of benefits shall be determined as specified
in paragraph (f)(3) of this regulation.
(3) The standard
contingent-benefit-upon-lapse credit shall be equal to 100% of the sum of all
premiums paid, including the premiums paid before any changes in the benefits.
The insurer may offer additional shortened benefits period options, if the
benefits for each duration equal or exceed the standard
contingent-benefit-upon-lapse credit for that duration. However, the minimum
contingent-benefit-upon-lapse credit shall not be less than 30 times the daily
nursing home benefit at the time of lapse. In either event, the calculation of
the contingent-benefit-upon-lapse credit shall be subject to the limitations of
subsection (g) of this regulation.
(4) The contingent benefit upon lapse shall
be effective during the first three years as well as thereafter.
(5) Notwithstanding paragraph (f)(4) for a
policy or certificate with attained age rating, the contingent benefit upon
lapse shall begin on the earlier of the following:
(A) The end of the 10th year following the
policy or certificate issue date; or
(B) the end of the second year following the
date the policy or certificate is no longer subject to attained age rating.
(6)
Contingent-benefit-upon-lapse credits may be used for all care and services
qualifying for benefits under the terms of the policy or certificate, up to the
limits specified in the policy or certificate.
(g) The benefits paid by the insurer while
the policy or certificate is in premium-paying status and in the paid-up status
shall not exceed the maximum benefits, which would be payable if the policy or
certificate had remained in premium-paying status.
(h) There shall be no difference in the
minimum contingent-benefit-upon-lapse benefit as required under this regulation
for group and individual policies.
(i) The requirements set forth in this
regulation shall be effective on and after January 1, 2003 and shall apply as
follows:
(1) Except as provided in paragraph
(i)(2), the provisions of this regulation shall apply to any long-term care
policy issued in this state on or after January 1, 2003; or
(2) for any certificate issued on or after
January 1, 2003, under a group long-term care insurance policy as defined in
K.S.A.
40-2227(e) and amendments
thereto, which policy was in force at the time this proposed regulation became
effective, the provisions of this regulation shall not apply.
(j) Premiums charged for a policy
or certificate containing a contingent benefit upon lapse shall be subject to
the loss ratio requirements of K.A.R. 40-4-37k treating the policy as a whole.
(k) To determine whether
contingent-benefit-upon-lapse provisions are triggered under subsection (d) of
this regulation, each replacing insurer that purchased or otherwise assumed a
block or blocks of long-term care insurance policies from another insurer shall
calculate the percentage increase based on the initial annual premium paid by
the insurer when the policy was first purchased from the original insurer.
